Professor Hill stated that the idea of an "exempt sector" of organizations engaged in distinctive activities no longer describes charities, which now engaged in activities that are often indistinguishable from those once thought characteristic of taxable entities. This has important implications for grant-making by private foundations.

New entities like social enterprises and new financial products like social impact bonds now offer new alternatives for realizing important social goals. Social enterprises are taxable entities that pursue social purposes, but there is no settled legal definition of a social enterprise. Social impact bonds, sometimes called pay-for-success bonds, will pay interest and return the invested capital only if the project in which they were invested is successful under defined metrics.

Grant-making private foundations can generally make grants to taxable entities only if they constitute "program related investments," which means that they are used by a taxable entity for a charitable activity. If these rules are not satisfied, a foundation can be subject to excise taxes. Even the 2012 proposed regulations treating more grants to taxable entities as program related investments will not provide grant-making foundations much certainty in this rapidly changing world of social enterprises and new financial products.

Lawyers representing grant making private foundations can best serve their clients by becoming familiar with the new enterprises and new financial products, many of which have already become controversial.